In the previous article, we had looked at some of the problems with banks today. Solutions to most of them are still being explored. But as William Gibson once said, “The future is already here — it’s just not very evenly distributed”. In this post, we will look at major banking trends and explore ways in which banks are already using existing technology to solve their current challenges and stay relevant in today’s marketplace.
There is no denying the fact that banking has come a long way but if we talk about disruptive transformations on a large scale, those seem to be missing. While we have a lot of future aspirations about the potential of technology in banking, we are already witnessing the rise of small ways in which banks are using modern technology to appeal to consumers and transform their traditional ways of operating.
With the proliferation of banking services, especially in India, banks have started to warm-up to hyperlocal services and offer location-based benefits. Following are some ways in which banks are doing that:
Convenience is among the top factors that a customer considers when choosing a banking relationship. They want the branch to be near where they live or where they work. You need to deliver your message of convenience to people around your branch. And you can do this by geo-targeting your ads based on smartphone GPS data.
Most smartphones today are location-aware, and you can tap into ad networks of companies like Google to utilize this information. You can, in fact, further contextualize your ads. For example, a Starbucks’ customer may be a good fit for your bank – therefore, you can target smartphones that connect to a Starbucks’ Wi-Fi network for better results.
It is not enough if you can locate your best prospects. To be truly hyperlocal your prospects should also be able to find you. If a new resident in your locality searches for “best banks” near her location – your bank must show up.
For this to happen, you will have to claim all your listings and update them with the right information. You will also have to ensure that your website is optimized for local search, and you have incorporated geographic terms wherever possible.
Over three-fourths of the adult population today is active on social media. While social media has been a part of digital banking trends for sometime now, it needs to be incorporated smartly in your hyperlocal strategy.
Social media doesn’t just let you pinpoint your ad spend to geographic locations, but you can use demographic filters. This allows you to craft community-based messages for various micro markets around your branches.
You also need to build your corporate social media presence. This would include at least a Facebook page and a twitter handle where you can talk to your customers, address their concerns. Whether you like it or not, your customers are bound to share their experiences online – it is best if you listen to them and respond as well.
Not all of your marketing efforts have to be digital. Get the people on street to promote one-off events that would generate footfalls in the branch. Create contests, giveaways, or some form of edutainment to get the community excited. For example, the Summer Carnival organized by YES Bank.
Check out 6 outstanding examples of experiential marketing campaigns and learn from how Heineken used GPS-enabled bottles that attracted tourists in Amsterdam to the Heineken Experience museum by guiding them through a treasure hunt.
Encourage each of your branches to explore ways they could work with the local merchants. For example, if there is a local fair – don’t just donate to support it, but rent a booth there and conduct some marketing activities.
Or if a local gym needs a loan to buy equipment, offset some of the cost by getting your branding on some of the equipment. You are only limited by your imagination in ways you could work with the local community.
As the risks associated with cyber frauds has increased, authentication strategies have grown in complexity. One of the ways of simplifying the process is to use risk-based authentication. This approach is built on the fact that the risk associated with different operations is different. For example, checking balance amount is a lower risk operation compared to transferring ₹30,000 to another account.
Therefore, providing a simpler authentication process for the former will enrich the customer experience without impacting the security. Even with risk-based authentication strategy being employed, the use of geolocation and biometrics can make the process easier for the user.
With smartphones being widely used to avail banking services, banks can use the various sensors on the device to authenticate the user. Banks like ICICI Bank are already using the fingerprint to login users to their mobile app.
Further, some banks are already exploring the use of video identification for this. A Fingerprint can also be used as a second factor for authentication when using a credit card. Mastercard Biometric Card already used fingerprint to authenticate the user.
With the increasing adoption of biometric ID by the consumers, it has become paramount for banks to break the dependence on device-based systems that are fragmented between various mobile devices and platforms. Banks need to develop a uniform experience for its customers while ensuring enterprise-grade identity and compliance to the strict industry regulations.
Building an authentication hub is one of the solutions being explored by providers like Accenture. IEEE 2410 Biometrics Open Protocol Standard is among the developing user-centric authentication framework that is robust enough for adoption by the highly regulated banking industry and is fast becoming the de-facto standard across industries.
As many newcomers are slicing up the m-commerce space by providing to the customers what they need, when they need it, the banks are launching multiple pilot projects to stay relevant.
“You will see more and more different types of pilots in the space. What works ultimately is a question mark, but if you are not testing and learning and piloting along the way, you will be left out of the future.”
Banks provide a way to make payments, but that is just one function of bank. Modern customers want more. They are interested in shopping on their mobile phones.
So, many banks have started converting payments into shopping – and this can be done by integrating a shopping catalog into the bank’s app. Some banks are already doing this with Payback – where you can shop by using the rewards you earn by using your bank’s services.
Providers like Monitise take it a step further. The app pitches products to the customer based on their other purchases, and they can shop without having to provide banking details again as they are already inside the bank’s app. Citibank had this to say as far back as 2014: “At Citi, we see ourselves as both enabling mobile retail and being a mobile retailer ourselves.”
One can say enabling shopping and reducing friction in payments while shopping is one of the rising trends in retail banking.
One of the latest trends in banking technology is the use of Beacons. Banks are exploring the use of Beacons to help merchants with in-store mobile marketing. Beacons are devices that identify smartphones near them and can transmit personalized deals to them using low-energy Bluetooth signals.
For example, if a customer spends some time at the deodorant aisle – she may receive an offer on the deodorant purchase. The challenge so far has been to convince the customer to download and install an app for this purpose alone. In theory, this could help combat the situation where a customer visits a store to check a product out but then orders it from an online retailer like Amazon.
To keep up with changing customer expectations, a point of sale system has to offer much more than just a point where payment is made. One of the most popular value-added services the banks can provide at POS is conversion to EMI. Typically, such conversion may require customer documentation – but given the fact that the bank already has the requisite information and also is aware of the customer’s repayment and transaction history, the paperwork can be eliminated. Most POS conversions to EMI do not even charge a processing fee.
Another popular POS service is access to a line of credit against the credit card receivables. This gives the merchants the ability to meet the short-term working capital requirement if the receivables build up at the start of the month. POS can also allow for dynamic currency conversion so that sale price is also available in cardholder’s home currency at the time of checkout.
Mastercard is going ahead of the crowd with its AR/VR payment solution – Masterpass.
As India moves towards a less-cash economy, the ability to pay using the mobile phone even for offline purchases has become important. At the moment, apps like PayTM seem to be dominating the space of QR code payment solutions.
The banks with their captive customers could do better here. This would do away with the need to transfer the monies to a digital wallet just to use a scan and pay solution. Additionally, being aware of a customer’s spending pattern would allow banks to present customized offers that would increase customer retention.
With increasingly affordable smartphones and tablets entering the market, it can be immensely profitable to take advantage of these devices for POS applications as well.
This may require additional hardware to be plugged into the tablet/smartphone for interacting with the bank’s card but that would be far more portable than the current POS devices. Such POS systems are already being adopted by a retailer like Amazon as they replace cash-on-delivery with swipe card on delivery.
Banks are generally considered to be too large to be agile enough to experiment with technology. This is fast changing as many of the banks are building in-house innovation labs.
An innovation lab is a place where a bank can build new customer experiment without worrying about the negative impact if the experiment fails. It allows them to operate more like new-age tech companies that fail fast, and keep improving their solutions.
Over the last decade, many banks have launched their innovation labs including Capital One, Citi, Visa, BBVA, DBS Bank, Chase, Fidelity, FIS, Lloyds, FIS and USAA. USAA even allows its customers to participate in the lab’s experiment and test new services before they become widely available.
When you think of a bank, you possibly think of long lines at teller windows. This is set to change as self-service teller kiosks become the norm. These kiosks allow the user to complete the typical bank transactions like account opening, account maintenance, appointment booking, and financial product research and purchase without having to depend on an “operator”. For times when interacting with someone is a must, kiosks also give access to a video teller that will assist in the transaction as required.
Customers increasingly prefer to interact with their banks online. This is being reflected in how branches are designed as well.
Take, for example, The Ark branch of UnionBank in the Philippines. Here customers are encouraged to connect to the wifi and fill all their forms online. They lounge, and pick up a tablet provided by the bank to receive any service they like. Or they can connect their device to the WiFi and receive the same service. No more paper forms to fill if you want a new credit card or a personal loan.
According to the bank, the digitization of the process has reduced the time taken for account opening to 15 minutes from an average of one hour earlier. Not only this, UnionBank’s The Ark has already been launched as its first fully digital branch in Philippines.
Similarly, UOB’s fresh bank layout in Singapore has carved out personal space where each customer can interact with their personal relationship manager in complete privacy. You will not have to go to different counters for different services.
These are just some of the most exciting and recent trends in banking that are revolutionizing the whole industry. Innovative approaches are leading to varied solutions across the industry.
Some of these will be adopted more widely than others – but it is important for banks to keep experimenting and improving the solutions they present to their customers if they want to survive in the increasingly competitive marketplace.
If you are a banking executive and want to keep a watch on latest innovations and explore some interactive solutions for your banks, do subscribe to our newsletter or contact us directly to have a chat with us!
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